The Moto E has a 4.3in display, a 5-megapixel camera and all-day battery life. Photograph: Motorola

Motorola launched yet another low-price smartphone on Tuesday, going head to head with lesser known Chinese and South Korean manufacturers with its £89 Moto E handset.

The device is aimed squarely at first-time smartphone buyers, who might ordinarily have bought a feature phone, getting the basics of a decent Android phone at an affordable price.

Charlie Tritschler, senior vice-president of products at Motorola, told the Guardian: “We are on a mission to end the feature phone. We believe at this point there is enough capability in what we can create in terms of smartphone level that it’s time to say goodbye to feature phones.”

RAM today

The 3G Moto E runs the latest version of Google’s Android software and has a 4.3in display, a 5-megapixel camera and all-day battery life. It also has 4GB of built in storage and a microSD card slot for adding up to 32GB more space for movies, music and photos, as well as 1GB of RAM – typically double that of most other phones under £100.

Motorola hopes that the Moto E can continue the momentum that its last budget offering, the popular Moto G, has built in the UK, Europe and developing markets like India. The Moto G was launched in November last year costing £135 in the UK, but was frequently available for under £100 from mobile phone networks on pre-paid plans.

Guaranteed upgrade

Tritschler said: “We really want to drive down the cost of an exceptional phone, something our engineers have been working on for a while resulting in the Moto G and now the new Moto E, with which we can drop the price down even further."

Motorola is promising “all-day battery life” for the Moto E, and has fitted it with features such as Corning’s scratch-resistant Gorilla Glass 3 and P2i’s waterproof nano coating (which makes the phone splash-proof) that are found only on smartphones costing twice as much as the Moto E.

As with the Moto G, Motorola will guarantee an upgrade to the next version of Android for the Moto E, something that cannot be said for most of the other smartphones in its class. Motorola is also using a version of the Android software that has none of the modifications that other manufacturers like Samsung and HTC typically make, which are often considered to slow the performance of cheaper smartphones.

Smartphone penetration on the march

Tritschler said the Moto E was “the phone for folks who would like to have a smartphone but just can’t afford it". He added: "Now they’ll have a product that offers a great smartphone experience that allows them to shift off a feature phone.”

Smartphones in the UK are projected to reach 80% penetration by January next year, with 90% sometime between mid-2016 and the end of 2017. At that point, almost every person who wants to buy a smartphone will have bought one, which could make very low-end smartphones like the Moto E redundant.

In the meantime, if the keenly priced Moto E performs similarly to the Moto G, being snappy and lasting a solid day on a single charge, it could sell very well, especially in the run-up to Christmas.

Motorola also launched an update to the Moto G, adding 4G and a microSD card slot for storage expansion costing £149.